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NATO’s Welfare Bums

As NATO celebrates its sixtieth birthday in April, there are mounting signs of trouble within the alliance and reasons to doubt the organization’s relevance in the twenty-first century. The most worrisome indicator is that the defense spending levels and military capabilities of NATO’s principal European members have plunged since the end of the cold war. The decay of their military establishments has reached the point that American leaders warn that joint operations with U.S. forces are becoming difficult, if not impossible.

With the partial exceptions of Britain and France, the military budgets—to say nothing of crucial spending on force modernization—of the European allies have been in virtual free fall for nearly two decades. The spending and force levels of Germany, Italy, and Spain illustrate the problem. Spain devoted 1.85 percent of its gross domestic product to defense in 1989 and deployed more than 274,000 troops and 244 combat aircraft. By 2008, those figures were down to 0.73 percent of GDP, fewer than 222,000 troops, and 197 aircraft. The plunge in spending and military capabilities for Italy has been equally dramatic. In 1989, Italy spent 1.94 percent of GDP on its military, and the country had nearly 390,000 troops and 425 combat aircraft. In 2008, the figures were 0.96 percent, 293,000 troops, and 266 aircraft.

Berlin’s free fall in military spending and force levels is perhaps the most disheartening. During the cold war, West Germany was the frontline state and a crucial military partner in containing the USSR. Berlin’s military spending in 1989 was 2.27 percent of GDP, and the Bundeswehr had 469,000 active-duty military personnel and 621 combat aircraft. By 2008, spending had shrunk to 1.19 percent of GDP, and the active-duty force was down to fewer than 245,000 troops and 310 combat aircraft. Germany’s navy had also shrunk by nearly 50 percent, declining from 208 vessels to 111.

The slippage in Britain and France is also worrisome, although spending levels were higher to begin with and remain at marginally more respectable levels than do those of other NATO allies. Yet, Paris, which devoted a modest 2.98 percent of GDP to the military in 1989 and fielded 461,000 troops and 697 combat aircraft, is now spending only 1.54 percent, while force levels are only 353,000 troops and 351 aircraft. For Britain, the figures in 1989 were 3.98 percent, 306,000 troops and 583 aircraft. In 2008, the figures were 2.33 percent, fewer than 161,000 troops and only 356 aircraft. Even the vaunted British navy had shrunk from 206 vessels to 109. Only four European members meet the meager goal set by alliance leaders to spend at least two percent of GDP on defense. By contrast, U.S. military spending (including the expenditures for operations in Iraq and Afghanistan) is nearly 5 percent of GDP.

NATO’s principal European members have gone from countries that somewhat underinvested in defense during the cold war to countries whose defense spending levels now fail to meet even the straight-face test. It is no wonder that U.S. military leaders no longer consider most of those allies to be credible partners for joint war-fighting scenarios.

Yet, astonishingly, some American policy experts insist that only by spending even more than the vast sums it already spends on the military will Washington have meaningful influence to get the European countries to increase their paltry efforts. Robert Kagan, a senior associate at the Carnegie Endowment for International Peace, denounces the possibility that the Obama administration might slow the surge in U.S. military spending that has occurred since 9/11. Such a move, he contends,

would make it harder to press allies to do more. The Obama administration rightly plans to encourage European allies to increase defense capabilities so they can more equitably share the burden of global commitments. This will be a tough sell if the United States is cutting its own defense budget.

The notion that the European members of NATO are interested in boosting their anemic military budgets—especially to help the United States handle global burdens, most of which would be outside Europe—is naive. Moreover, Kagan’s argument is a classic case of the triumph of hope over experience. Washington has been encouraging (indeed, often badgering or begging) the European allies to engage in greater burden-sharing since NATO’s inception in 1949—without much success. That was true even during the height of the cold war when the United States and the European powers faced a dangerous common adversary.

“ Washington needs, at long last, to stop enabling the irresponsible behavior of its NATO allies.”

That historical record suggests that Kagan’s thesis turns the role of incentives on its head. The more likely scenario is that if the United States continues to overspend on the military and implicitly subsidize the security of the European allies, they will be perfectly content to continue that arrangement. Indeed, that is what they have done for nearly six decades. The current economic constraints actually increase the tendency to free ride. Given the scope of the European safety nets, domestic political constituencies are likely to pressure their governments to divert even more revenues to welfare programs. There certainly will be few constituencies clamoring to boost military spending—especially when the United States is obligingly taking care of the continent’s security needs at its own expense.

If Washington wants to maximize the prospects that the NATO members will increase their military spending, U.S. officials need to adopt the opposite course: significantly cut spending and implement a phased withdrawal of American troops from Europe. That would drastically alter the incentive structure. Especially with Russia beginning to flex its muscles, prudence would dictate that the European powers take security issues more seriously and create at least respectable military capabilities as basic insurance. To do otherwise would be to risk being vulnerable to escalating pressure from Moscow on a variety of issues.

But existing U.S. defense policy, to say nothing of the policy Kagan and others are promoting, short-circuits the incentive for the European powers to do more for their own defense. Washington needs, at long last, to stop enabling the irresponsible behavior of its NATO allies.